Collateral Catch: Investigation into indicted bailbondsman snared other members of troubled waterfront union

The International Longshoremen’s Association (ILA), the nation’s largest union of maritime workers with some 43,500 members stationed along U.S. and Canadian coasts, has deep roots in Baltimore. Baltimore native Richard Hughes Jr. has been its president since 2007, and he is also the business agent for ILA Local 953, based in Locust Point. Del. Brian McHale (D-46th District), who represents Baltimore’s waterfront in the state House of Delegates, is on Local 953’s roster as a steamship clerk. One of the ILA’s vice presidents, Horace Alston, heads the union’s Baltimore District Council. He and former ILA general vice president John Shade are trustees of Baltimore’s ILA Local 333.

But amid the well-connected ILA members in Baltimore, one longshoreman in particular raised the union’s profile recently: Milton Tillman Jr.

A politically connected ex-con and real-estate investor who is the dominant force in Baltimore’s bailbonds industry, Tillman Jr. is also a member of ILA Local 333. On March 17, a federal indictment charging Tillman Jr. and his son, Milton “Moe” Tillman III, with tax fraud, wire fraud, and unlawful bailbonds practices, was unsealed (“Milton Tillman and Son Indicted in Bailbonds Conspiracy,” The News Hole, March 17). It includes charges that Tillman Jr. was paid for unloading ships at Baltimore’s docks on shifts when he was in Brazil, Argentina, Spain, and Las Vegas, among other places.

The Tillman investigation, court records show, also helped prosecutors nab three other ILA members in Baltimore–William Zichos Jr., Dale Kowalewski, and Joseph Bell–who were indicted on wire-fraud conspiracy charges last November. The three men are union timekeepers who record the hours clocked by dockworkers for payroll purposes. They are members of ILA Local 953, which represents clerical workers in Baltimore’s maritime industry. The case against them alleges they also got paid for no-show work by the stevedoring company Ports America, including at times when they were in France, Costa Rica, Iceland, Las Vegas, and Florida.

The trial in the timekeepers’ case, which had been scheduled to begin in April, was recently postponed until September. The Tillmans’ trial is expected to take four to five weeks, and is currently scheduled to start on May 24, though at a March 26 arraignment hearing in the case, Tillman III’s attorney, Steven Allen, questioned whether that’s a “realistic date.”

The U.S. Attorney’s Office in Maryland declines to confirm a connection between the Tillman investigation and the timekeepers’ indictment. “We can’t go beyond what’s in the public record,” spokeswoman Marcia Murphy says in an e-mail. “And there is nothing in the public record connecting those cases.”

But records in both cases show a nexus: an Aug. 18, 2008, raid on Building 1200A at Dundalk Marine Terminal.

Building 1200A, known as the “timekeepers shack,” was one of seven locations raided as part of a multi-agency probe into the Tillmans (“Tillman Properties Raided by Feds,” The News Hole, Aug. 20, 2008). The other locations–residences, a vehicle, and business offices associated with the Tillmans–were searched because agents expected to turn up proof of tax fraud and unlawful bailbonds practices. The timekeepers shack was targeted, according to the 65-page search warrant affidavit, because investigators expected to find evidence of Tillman Jr.’s suspected “‘no-show’ or ‘ghost worker’ scam.” Investigators on Tillman Jr.’s trail seized payroll documents and computer records from Building 1200A, including from the desks of Zichos, Kowalewski, and Bell.

Tillman Jr. was convicted of a similar scam in the 1990s, when he used a straw employee to work hours in his stead, so he could get paid without actually working.

After the raid, court records show, Zichos was called to testify before a federal grand jury. He met with prosecutors Martin Clarke and Stephen Schenning leading up to that grand-jury testimony, and his answers to their questions raised suspicions.

According to a Feb. 17, 2010, government filing in the timekeepers’ case, the prosecutors asked Zichos if he had ever received “no-show” pay. The filing says that initially, Zichos said “he had received pay for a no-show shift only once in his career . . . and that was when he attended his father’s funeral. In giving his answer, he appeared to be very nervous and overly emotional.”

Then Zichos owned up to “other times when people covered for him, such as when he had a doctor’s appointment or important personal business.”

“There were other times when he was paid for work he did not do, including when he went on vacation,” the filing states. “He was reluctant to give details or say who covered for him and he appeared nervous and upset while giving his answers.” The prosecution’s filing says that Zichos admitted to more occasions when he received no-show pay, though he is “still not clear on some of the details, especially who had covered for him.

“The government later learned that Zichos’ grand-jury testimony was inconsistent with evidence . . . from other sources regarding the scope of his involvement in a no-show scheme involving the timekeepers,” the filing says, “especially the extent to which he covered for others so they could receive no-show wages.”

The ILA’s problems in Baltimore got worse in January when Local 333’s members sued its leadership. Among those leaders are ILA vice president Alston and former general vice president Shade, who gained control of Local 333 in 2005 when the national union placed it in trusteeship due to alleged improprieties. The suit, filed in federal court, alleges that since Local 333 entered trusteeship, unlawful conduct has pervaded its leadership. It cites missing money, unapproved salary increases, shifting Local 333’s jurisdiction over port jobs to another newly formed local, and negotiating with employers behind the membership’s back. The lawsuit also claims that Local 333 is close to bankruptcy.

Shade has other problems, as well. Last year, he lost his position as ILA general vice president after the Waterfront Commission of New York Harbor, which polices the New York/New Jersey docks for organized-crime ties, concluded that he was prohibited from holding the position due to his criminal history. According to a New York Supreme Court ruling from Oct. 2009, which upheld the commission’s decision, Shade has “convictions for felonies, all dating between 1970 and 1990 and relating to illegal gambling.”

Since 2005, the union’s bosses in New York have been fighting prosecutors who, in a civil Racketeer Influenced and Corrupt Organizations (RICO) case, say the union is captive to organized crime. Hughes and Alston are named as defendants in the case, which includes allegations of no-show jobs. “We’re still waiting for a decision on our motion to dismiss,” says Don Buchwald, Alston’s New York lawyer.

Attempts to reach Shade, Alston, and Hughes to comment for this article were unsuccessful. McHale, who is busy tending to legislative business during the ongoing General Assembly session, also could not be reached for comment. Lawyers for the Tillmans, Zichos, Kowalewski, and Bell either declined to comment or did not return phone calls.

Ronald Barkhorn, one of Local 333’s members and a plaintiff in the lawsuit against the local’s leadership, offered his perspective on the ILA’s problems in Baltimore in a recent interview.

“The Tillman thing was just something the feds could use to get the door open,” he says. “To get that warrant to get the payroll records and prove the ‘ghosting,’ when they pad the payroll with fictitious people, just like in the RICO case in New York.” As further evidence of dockside intrigue, he points to another federal criminal case involving embezzlement of pension funds from the Waterfront Guard Association Local 1852, in which two union officers pleaded guilty last year.

“It’s all ongoing,” he says of the government’s waterfront probe, “so you’re not going to find the real deal because it’s all secret.”

Barkhorn’s contention appears to be confirmed in the court record of the timekeepers’ case. The Feb. 17 filing by prosecutors says that the “underlying investigation” is “still ongoing,” though it’s not clear if it refers to just the Tillman case or something more far-reaching.